The Unlucky Millions Paying More for Medicare

A quirk in the laws governing Medicare and Social Security will expose millions of Americans to a staggering 50 percent increase in their premiums for the part of Medicare that covers doctors’ bills, known as Medicare Part B. It is imperative that Congress pass legislation to protect low- and middle-income people who cannot pay that much.

Under a 1997 law, premium payments must cover 25 percent of the projected per capita costs for Part B. The premiums, which can rise and fall from year to year, are usually deducted from beneficiaries’ Social Security payments each month. A “hold harmless” provision guarantees that for most people the dollar amount of a premium increase cannot be so big that they are left with a Social Security check that is less than that of the year before. The goal is to ensure that beneficiaries, most of whom have modest incomes, don’t have less money to live on.

The problem is that Social Security recipients will not get a cost-of-living increase in 2016, but Part B premiums are projected to rise. The roughly 70 percent of beneficiaries who are “held harmless” will pay the same premium as last year. That means the increased cost will have to be made up by the other 30 percent, because of the rule that premiums must cover one-quarter of Part B costs. This group includes 2.8 million new enrollees, 1.6 million people who don’t collect Social Security benefits and 3.1 million higher-income beneficiaries.

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CreditAndrew Harrer/Bloomberg

All together, more than seven million people will have to pay the premium themselves; millions of others are covered by state Medicaid programs, whose budgets will strain to meet the added costs.

The Part B premium has been just under $105 a month for three years, but it is projected to reach $159 in 2016 and then drop to $120 in 2017.

Similarly, the Part B deductible, which must be paid by everyone on Medicare (no one is “held harmless”), will rise from $147 in 2015 to $223 in 2016, before falling back to $169 in 2017. This will pose a particular burden to beneficiaries just above the poverty line who aren’t eligible for assistance from Medicaid in paying deductibles.

Congress needs to curb the wacky up-and-down movements of premiums and deductibles in 2016 and 2017 and find offsetting savings that won’t harm Medicare recipients in other ways. For a permanent answer, it should consider holding all beneficiaries harmless or changing the rule that premiums must cover a quarter of the costs.